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Acer Suing Former CEO For Breach of Non-Compete

By - Source: TechCrunch | B 12 comments

Former Acer CEO and President Gianfranco Lanci may have joined Lenovo a little too soon.

On Tuesday Acer said that it had initiated legal action against former CEO and President Gianfranco Lanci. The company claims that Lanci has breached the non-compete clause in his contract when he left the company in March 2011. Acer has initiated legal action in Italian courts, the company said.

Lanci stepped down from his position at Acer last year over disagreements around product strategy. After joining the company in 1997, he helped Acer expand its global presence, presiding over the acquisitions of both Packard Bell and Gateway. Thanks to his leadership, Acer at one point became the second biggest PC company in the world.

But as consumers began to shift to smartphones and tablets, the split between Lanci and Acer investors began to grow: Lanci wanted to push the company to become more mobile-focused and more global. Acer also needed to focus on software and hardware integration by expanding from 300 to 400 engineers to 1,000. This meant hiring talent that currently wasn't present in Taiwan.

But investors feared that this move would lead to a "de-Taiwanization" of the company. Lanci argued that it's just globalization. "If we want to be in the top three (PC makers) in the next three to five years, we need to be a global company and we need to leverage resources wherever they are," he said in an interview at the time.

The bickering between Lanci and the investors continued. Meanwhile, Acer was late in delivering on its smartphone and tablet vision. It misjudged the weakness in demand for products in Europe and the United States, thus leading to two consecutive quarters of missing earnings guidance. It also brought a $150M write down for excess (unsold) inventory in Europe.

Yet had Acer followed his vision, Lanci said the $20 billion business would have quickly grown to a $30 billion business, bringing in over a third of its sales from smartphones and tablets by 2015. "People after a few years will decide who was wrong," he said.

Seven months after leaving Acer, Lanci signed on with Lenovo as a consultant focusing on assisting the computer firm to build itself as a consumer brand. Shortly thereafter, he was appointed the head of Lenovo's Europe, Middle East and Africa businesses last month.

"Gianfranco brings years of expertise and insights to Lenovo that will help us strengthen our growing global consumer business," Lenovo CEO Yuanqing Yang said of Lanci’s new role last year. But apparently Lanci wasn't allowed to share that expertise and insight with Lenovo, as Acer states that there is a 12-month non-compete period in Lanci's agreement.

"We believe Mr. Lanci has clearly breached the terms of the non-compete agreement he entered into willingly," the company states. "We believe we have a very robust case."

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  • 10 Hide
    Khimera2000 , February 7, 2012 8:18 PM
    I would agree to the non-compete agreement if Acer was actually following his advice, and advancing on that advice to gain a competitive edge. The article makes it sound like the board was making the decisions not him, and that's why he left.

    I think there should be an argument that Acer was not using him as an asset, and the non-compete time should of started from the day the shareholders went against his advice. After all once the board stops listening to the CEO, he is no longer using his talents to move the company forward.

    just my thoughts on it though.
Other Comments
  • 5 Hide
    shadamus , February 7, 2012 7:17 PM
    I suggest that those holding non-compete agreements over their employees take those agreements, fold them until they are all corners, bend over, and ...

    Let's just say "I'm not a fan of non-competes".
  • -2 Hide
    vilenjan , February 7, 2012 7:24 PM
    Than why did he sign the agreement? I am sure he was paid very well for it. He choose to greedy and break it, and should twice pay for it.
  • 10 Hide
    Khimera2000 , February 7, 2012 8:18 PM
    I would agree to the non-compete agreement if Acer was actually following his advice, and advancing on that advice to gain a competitive edge. The article makes it sound like the board was making the decisions not him, and that's why he left.

    I think there should be an argument that Acer was not using him as an asset, and the non-compete time should of started from the day the shareholders went against his advice. After all once the board stops listening to the CEO, he is no longer using his talents to move the company forward.

    just my thoughts on it though.
  • 2 Hide
    omega21xx , February 7, 2012 8:21 PM
    Was he supposed to just wait a year without a job? To me it's kind of ridiculous, i wouldn't want to chose to work at some random place that can't utilize my talents just so i can avoid running out of money while i wait to get back to a place that can and i enjoy working at.
  • 2 Hide
    Anonymous , February 7, 2012 9:04 PM
    @omega21xx Yeah, those CEOs making $500k+ must have a terrible time suffering through their non-compete agreement's imposed unemployment.

    Forgive me for lacking sympathy.

    And he signed the damned thing, and then violated it. Time for him to pay up.
  • 2 Hide
    omega21xx , February 7, 2012 9:18 PM
    @curious
    I wasn't saying that he'd have a hard time, but I hate having too much free time and i know some people enjoy working, not just for money.
  • 0 Hide
    alidan , February 7, 2012 11:30 PM
    omega21xxWas he supposed to just wait a year without a job? To me it's kind of ridiculous, i wouldn't want to chose to work at some random place that can't utilize my talents just so i can avoid running out of money while i wait to get back to a place that can and i enjoy working at.


    non competes are a standard for high ranking positions, and for people when a company puts money into you, like training you need tech schooling for, and they pay you to work...

    you can still get a job, however you cant use the skills that they gave you, or in the case of a company, the things you know because of them... like company secrets and such.

    TheCuriousLlama@omega21xx Yeah, those CEOs making $500k+ must have a terrible time suffering through their non-compete agreement's imposed unemployment.Forgive me for lacking sympathy.And he signed the damned thing, and then violated it. Time for him to pay up.


    you know i kind of agree... if this was just a case of him quitting and getting a better job... but it seams like they refused to listen to him, he got sick of it, and 7 months later was offered a new job that apreaciates him... i dont think its as simple as what the contract says...
  • 2 Hide
    blueer03 , February 8, 2012 3:06 AM
    You don't not work during a non-compete. As long as you have an offer from a competitor, and they hold the position for you, your company has to pay you a salary (defined in the non-compete). In this case, if he got the offer 7 months after leaving, Acer would have paid him for 5 months. Once that year was up, he would be free to work wherever he wanted.
  • 0 Hide
    martel80 , February 8, 2012 5:34 AM
    Non-compete applies only if one joins a company with portfolio overlap. If he joined e.g. Adobe, there would be next to no overlap with Acer's business (I guess).
  • 0 Hide
    Anonymous , February 8, 2012 8:20 AM
    In general non-competes are unfair and should be freely ignored. However in the case of CEOs I might make an exception. The article just says he "left the company" and makes no mention of compensation.

    I'm sure we've all seen cases where CEOs run their company in to the ground and are 'fired' and told to take their multimillion dollar severance payment and go. I'm not implying this guy was fired for incompetence, I'm wondering if he got a very large severance payment. One which in my opinion might buy them the right for him to take a break for a year.

    Some people might rememeber a certain Vice President who wasn't working for Halliburton but was still getting 'deferred payments' from them. It's possible Acer is actually still paying this guy, we don't know.

    The short version is this. CEOs very rarely get handed the sort of crappy contract a normal worker does. They usually get the gold plated ultimate luxury version. If I got my annual salary or more as a severance payment I'd be more included to accept the non-compete clause. Without more details I'm reluctant to accept this guy was hard done by.
  • 0 Hide
    gm0n3y , February 8, 2012 5:43 PM
    blueer03You don't not work during a non-compete. As long as you have an offer from a competitor, and they hold the position for you, your company has to pay you a salary (defined in the non-compete). In this case, if he got the offer 7 months after leaving, Acer would have paid him for 5 months. Once that year was up, he would be free to work wherever he wanted.

    The last company I worked for had a non-compete agreement and there was no such stipulation. The agreements themselves rarely hold up in court (at least for IT employees) unless you were using specific knowledge from your last company (e.g. pricing agreements with competitors). Non competes are supposed to be there to stop you from going to a competitor and divulging company information. After 12 months, whatever info you had is out of date anyways. That's not to say that you can't work for a competitor, just that you can't divulge any of that information.
  • 0 Hide
    Crush3d , February 8, 2012 5:52 PM
    They should be happy he's working with Lenovo, not upset about a non-compete. If they think he was giving them bad advice (after all, they weren't following it, and who doesn't follow a good strategy) then they should be thanking him for giving that "bad strategy" to Lenovo..